Bloomberg – Peru’s top economic officials argue the country’s economy is fragile. Central Reserve Bank President Julio Velarde appeared to criticize Economy and Finance Minister Jose Arista during a mining event this week.
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Velarde, who has been in office for 18 years, said that in the past, economy ministers have been able to prevent Congress from increasing public spending, but these officials now fear being fired by Congress, criticizing or trying to stop some initiatives.
“Let’s hope our next president gets a majority in Congress,” Velarde said. President Tina Polwart has been in power since December 2022 without any representation in parliament, and her popularity has fallen to 7% as she is besieged by corruption scandals, mass protests and climate issues as the country navigates its second worst recession in 33 years.
Conflict is rare in Peru Velarde is regarded as a cornerstone of economic stability. In office since 2006, Velarde’s longevity has allowed him to outlast more than a dozen economy ministers.
For his part, Arista criticized Velarde on Friday. “Perhaps Julio should listen to the ministry’s request to be more proactive in lowering interest rates,” Arista told reporters.
Arista said the central bank has cut rates from a high of 7.75% last year to the current 5.75% – the lowest among its peers in the region – and this is not enough. “It won’t help us get the economy going again as quickly as we would like,” he added.
Velarde, meanwhile, has been praised for quickly reining in inflation, which recently reached just 2.4% annually, although he was criticized last year for his optimism that the Peruvian economy could grow in 2023, even as monthly economic data suggested continued slowdown. Now, he predicts that inflation will continue to decline this year.
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